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UPDATE 2-Sykes ups Q3 view on increased demand; shares rise
October 25, 2010 / 12:01 PM / in 7 years

UPDATE 2-Sykes ups Q3 view on increased demand; shares rise

* Ups Q3 adj EPS view to $0.41-$0.43 from $0.24-$0.26

* Raises Q3 rev view to $304-$306 mln from $296-$301 mln

* Shares rise as much as 13 percent (Recasts, adds analyst comment, background, stock movement)

Oct 25 (Reuters) - Sykes Enterprises Inc (SYKE.O) raised its third-quarter outlook, citing a strengthening euro and a rise in demand in the Americas, sending the business process outsourcing company’s shares up as much as 13 percent.

“It sounds like it’s pretty broad-based improvement across the board in existing client volumes. It’s relative to what they expected as several of their clients are experiencing better volumes,” Baird analyst David Koning said.

The company, which counts AT&T (T.N) as its biggest client, forecast third-quarter earnings, excluding items, of 41-43 cents a share, up from previous outlook of 24-26 cents a share.

On Friday, the company had said it will close four centers in the Philippines and consolidate leased space in its Delaware and Pennsylvania locations to cut overlap from its acquisition of rival ICT Group, which it bought last year. [ID:nSGE69L0M6]

Koning also attributed the restructuring announcement, which would lead to annual savings of $5.2 million, for the rise in shares of the company, which competes with Convergys (CVG.N), BPO arms of IBM (IBM.N) and Accenture (ACN.N) among others.

Sykes, which derives about 34 percent of its revenue from telecommunications and 25 percent from financial services clients, now expects revenue of $304-$306 million for the third quarter, compared with $296-$301 million it projected earlier.

The higher earnings forecast is also due to a tax benefit of 4-6 cents, the company said in a statement.

The Tampa, Florida-based company’s shares fell almost 22 percent to a four-year low of $10.85 after it posted disappointing second-quarter results in August. They have recouped most of their losses since then.

The stock was up 11 percent at $16.72 in morning trade Monday on Nasdaq. It touched a high of $16.89 earlier in the day. (Reporting by Himank Sharma in Bangalore; Editing by Aradhana Aravindan and Maju Samuel)

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